Profitability Research On SC Company

In recent years, home appliance manufacturing has developed rapidly and has become more and more international. Customers' demand has a tendency to diversity. All of these reasons make the appliance industry increasingly competitive. As a traditional home appliance manufacturer, SC's profitability has shown fluctuation, even decayed. The more volatile external environment and the more intense competition, the more attention requires to be paid to business operations. Financial analysis is a common way for enterprise managers to detect business conditions, to judge disadvantages and advantages of the company and to find enterprise faults. Therefore, financial analysis plays an increasingly important role in enterprise management.This paper presents the appliances industry conditions and introduces the financial status of SC company from three aspects--operating income, liabilities and net profit--finding that SC company has a slow revenue growth and its net profit appears negative growth; then from the profitability of business activities, the profitability of assets and the ability of collecting cash, this paper diagnoses and analyzes SC company's profitability. Adopting Du Pont analysis and serial replacement method to find out the specific cause of the low profitability and the impact of various factors, this paper found that low profitability is mainly caused by making wrong diversification strategy decision, lack of effective new product development strategy, the high cost and high period cost and the low inventory turnover ratio and accounts receivable turnover ratio. Some suggestions are put forward in this paper. Firstly, grasping the challenges and opportunities of the market, adopting high efficiency low-energy process to produce products to save costs; secondly, improving personnel management efficiency and machinery utilization rate to reduce costs; thirdly, establishing relevant system to regulate inventory and accounts receivable management to improve inventory turnover ratio and accounts receivable turnover ratio; fourthly, in accordance with market demand, developing new products and using diversification strategy rationally, integrating resources to achieve optimal development.Through analyzing the profitability of SC company, this paper aims to provide effective advice and strategies to help managers improve the company's management, and ultimately to enhance SC's profitability and industry competitiveness.